How Instagram and Facebook Make Money — Focused Ads for Advertisers

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Everyday more than 2 billion people use Facebook, Instagram, WhatsApp or Messenger — that’s more than a quarter of the world’s population.

Facebook is still growing, even though a number of privacy scandals and public backlash have angered people.

Since Facebook, Instagram and WhatsApp apps are free to use, Facebook sells advertising for earnings. According to CNBC, 99 percent of Facebook’s revenue came from advertising, with about 7 million advertisers. Here’s how the company’s advertising model works.

Simple display ads have evolved into targeted ads where the advertiser can pick what type of audience they want to reach. Targeted ads are possible because of the data collection Facebook receives from users — what they like, what makes them smile, what makes them angry, what pages they like, what groups they join, shared locations, what RSVPs they make, etc. Facebook doesn’t only gather data from Facebook; the company also gathers information from your activity on Instagram and WhatsApp. Facebook harvests all this information to figure your interests, what your looking for, and what kind of person you are.

The Facebook pixel is an analytics tool that website owners can use you to measure the effectiveness of advertising by understanding the actions people take on their website.

Pixel data is used to:

Make sure customer’s ads are being shown to the right people

Build advertising audiences

Unlock additional Facebook advertising tools

Website owners set up the Facebook pixel by placing pixel code on the header of their websites (not visible ). When someone visits a website and takes an action (like completing a purchase), the Facebook pixel is triggered and reports this action. Website owners and business owners know when a customer takes an action. The information helps businesses to reach that customer again through future Facebook ads, according to Facebook.


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